Q2 2012 Los Angeles, California Apartment Submarket Trends

The Westside, heading from Downtown to the Pacific Ocean, is the most affluent section of Los Angeles County. Northern sections such as the San Fernando Valley and Tri-Cities area mix affluent and middle-income communities. Southern and eastern sections of the county are less well off. Downtown has been the location of a recent condominium and apartment development boom, beginning with the reuse of older office buildings and shifting to new construction.

Westside

The 41,030-unit Beverly Hills submarket has a vacancy rate of 2.4% in the second quarter of 2012, fifth lowest among 37 Los Angeles County submarkets, and an average asking rent of $1,887 per month, the fourth highest, according to data compiled by Reis. With a shortage of affordable housing in Los Angeles, most other low vacancy submarkets are low rent areas.

The vacancy rate fell 20 basis points in the second quarter and is down 110 year-over-year. Rent gains were again strong, with the average asking rent up 1.7% for the quarter, and the average effective rent up 2.1% to $1,855 per month. The year-over-year gains were 3.3% and 4.4%, respectively.

Marcus & Millichap reports a 2.7% vacancy rate in its Beverly Hills/West Hollywood submarket, and an effective rent of $1,803 per month, up 4.9% year-over year.

The 478-unit Wilshire La Brea broke ground in late 2011 for completion in early 2014. This submarket has 770 apartment units under construction.

In the 36,097-unit West Los Angeles/Brentwood/Westwood submarket, the vacancy rate is 3.9% and the average asking rent is $2,237 per month, the second highest countywide, Reis reports. Marcus & Millilchap reports vacancy here at 3.7%, and an effective rent of $2,140 per month, up 4.9% year-over-year.

The vacancy rate is unchanged for the second quarter, but is down 60 basis points year-over-year. The average asking rent increased 0.6% and the average effective rose 0.7% to $2,160 per month. The year-over-year gains are 2.1% and 2.5%, respectively.

A 59-unit building at Village Bel Air completed construction at 130 S. Sepulveda Boulevard in January. Two buildings with 114 units remain under construction.

The average asking rent in the 18,300-unit Santa Monica submarket, at $2,378 per month, is once again the highest in metro Los Angeles, according to Reis. The second quarter vacancy rate is 3.4%, up 10 basis points for the quarter but down 10 over 12 months.

Rent gains were modest here during the second quarter, with the average asking rent up 0.2%, and the average effective rent up 0.4% to $2,264 per month. The asking and effective averages are up 2.4% and 3.0% from a year earlier.

In February, the 318-unit The Village at Santa Monica, with 158 market rate units, broke ground at Ocean Boulevard and Pico Avenue. The expected completion date is August 2013. A project with 39 units is also under construction for completion in 2012, while 94 units are under construction at 501 Colorado Avenue.

Marcus & Millichap reports a 2.7% vacancy rate in Santa Monica, down 80 basis points year-over-year, and an effective rent of $2,218 per month, up 4.3%.

Central Los Angeles

The 14,065-unit South/Central Los Angeles submarket has a vacancy rate of 2.9% and an average asking rent of $919 per month, again the second lowest recorded by Reis.

In the second quarter the vacancy rate decreased 20 basis points; it is down 50 from a year earlier. The average asking rent rose 0.4% and the average effective rent increased 0.5% to $897 per month during the quarter. The year-over-year increases are 2.6% and 3.1%, respectively.

For the 44,732-unit Wilshire/Westlake submarket, Reis reports a second quarter vacancy rate of 3.7%, unchanged over the quarter, and an average asking rent of $1,244 per month, up 1.0% for the quarter.

The average effective rent rose 1.1% to $1,224 per month. The year-over-year gains are 3.8% and 4.1%, respectively.

In the 9,301-unit Downtown submarket, the vacancy rate is 5.5%, third highest among the submarkets, and the average asking rent is $1,853 per month, the fifth highest according to Reis.

The vacancy rate is unchanged from the prior quarter but it is down 170 basis points from a year earlier. The average asking rent decreased 0.1% over the quarter and the average effective rent rose 0.1% to $1,770 per month. The respective year-over-year gains are 2.4% and 3.3%.

Downtown is an active building market. Reis reports five projects totaling 600 units have completed so far in 2012, led by the 222-unit Roosevelt Lofts, which completed in July 2012. The 204-unit Huntington Apartments completed construction at 752 S. Main Street in January. This left four projects with 965 units under construction, including the 350-unit One Santa Fe which broke ground in January.

The 52,092-unit Hollywood/Silver Lake submarket has a vacancy rate of 2.9% and an average asking rent of $1,465 per month, Reis reports.

The vacancy rate fell 20 basis points during the quarter and 120 from a year earlier. Rent gains have picked up here. The average asking rent is up 0.8% for the quarter and 2.7% year-over-year, and the average effective rent, at $1,418 per month, is up 1.1% and 3.4%, respectively.

Development is active here as well, with the 1,035-unit Boulevard 6200 Apartments under construction, along with four other projects, totaling another 446 units.

For the 44,320-unit Sherman Oaks/Studio City/North Hollywood submarket, Reis reports a second quarter vacancy rate of 3.7%, and an average asking rent of $1,547 per month.

The vacancy rate fell 40 basis points in the second quarter, as the average asking rent increased 0.4% and the average effective rent rose 0.5% to $1,516 per month. Compared with a year earlier, the vacancy rate is down 90 basis points, the asking average is up 2.0%, and the effective average is up 2.7%.

There are four projects with 382 units under construction in this submarket. For its Sherman Oaks/Studio City submarket, Marcus & Millichap reports vacancy at 3.5%, down 100 basis points year-over-year, and an effective rent of $1,505 per month, up 5.4% over that time span.

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San Fernando Valley/San Gabriel Valley

The 14,250-unit Arcadia/Duarte/El Monte submarket has a vacancy rate of 4.1%, according to Reis, and an average asking rent of $1,161 per month.

The vacancy rate is unchanged from the prior quarter, and down 80 from a year earlier. The average asking rent increased 0.5% and the average effective rent rose 0.7%, to $1,154 per month, from the prior quarter. The asking average is 2.8% higher than a year earlier, with the effective average up 3.3%.

For the second quarter of 2012, Reis reports a 3.9% vacancy rate and a $1,653 per month average asking rent for the 19,583-unit Pasadena submarket, both unchanged from the prior quarter. The average effective rent increased 0.3% over the quarter to $1,584 per month. Year-over-year asking and effective gains are 3.1% and 3.9%.

Marcus & Millichap reports Pasadena vacancy at 3.6%, and an effective monthly rent of $1,596, up over 8.2% year-over-year.

The 23,406-unit South Glendale/Highland Park submarket has a 3.3% vacancy rate, and a $1,275 per month average asking rent, according to Reis.

The second quarter saw the vacancy rate fall 10 basis points as the average asking rent increased 0.8%, and the average effective rent rose 1.0% to $1,259 per month. The vacancy rate is down 40 basis points year-over-year, with the asking and effective averages up 1.8% and 2.0%, respectively.

In the 17,700-unit Burbank/North Glendale submarket, the vacancy rate is 4.2%, and the average asking rent is $1,500 per month, according to Reis.

The vacancy rate decreased 40 basis points during the second quarter, while the average asking rent rose 0.8%, and the average effective rent rose 1.0% to $1,445 per month. The year-over-year gains are 1.6% asking and 2.2% effective.

Marcus & Millichap report a 4.5% vacancy rate for Burbank/North Glendale, down 170 basis points year-over-year, and a $1,405 per month effective rent, up 2.7% over that time span.

For the 15,756-unit Azusa/Covina/Glendora submarket, Reis reports a second quarter vacancy rate of 4.1%, and an average asking rent of $1,165 per month.

In the second quarter the vacancy rate increased 20 basis points, the asking average rent rose 0.5%, and the average effective rent increased 0.6%, to $1,142 per month. The vacancy rate is down 60 basis points year-over-year, with the asking and effective rent averages up 1.0% and 1.6%.